The first automobile industry -- Changing the world's industrial structure --

Ultralight, hybrid-drive Hypercars -- Starting at one percent efficiency -- Making

light cars safe -- The hydrogen-fuel-cell revolution -- The end of the Iron Age --
Birth control for cars -- From commuting to community

The largest industry in the world, automotive transportation, is already well along
the way to a Factor Four or greater breakthrough in resource productivity. It is
also beginning to close its materials loops by adopting durable materials that can
be continuously reused to make new cars, and to reduce dramatically its pressure on
air, climate, and other key elements of natural capital by completely rethinking
how to make a car move. This restructuring of so well established a segment of the
economy is gaining its momentum not from regulatory mandates, taxes, or subsidies
but rather from newly unleashed forces of advanced technology, customer demands,
competition, and entrepreneurship.

Imagine a conversation taking place at the end of the nineteenth century. A group
of powerful and farseeing businessmen announce that they want to create a giant new
industry in the United States, one that will employ millions of people, sell a copy
of its product every two seconds, and provide undreamed-of levels of personal
mobility for those who use its products. However, this innovation will also have
other consequences so that at the end of one hundred years, it will have done or be
doing the following:

paved an area equal to all the arable land in the states of Ohio, Indiana, and
Pennsylvania, requiring maintenance costing more than $200 million per day;
reshaped American communities and lives so as to restrict the mobility of most
citizens who do not choose or are not able to own and operate the new product;
maimed or injured 250 million people, and killed more Americans than have died in
all wars in the country's history;
be combusting 8 million barrels of oil every day (450 gallons per person annually);
made the United States increasingly dependent on foreign oil at a cost of $60
billion a year;
relied for an increasing percentage of that oil on an unstable and largely hostile
region armed partly by American oil payments, requiring the United States to make
large military expenditures there and maintain continual war-readiness;
be killing a million wild animals per week, from deer and elk to birds, frogs, and
opossums, plus tens of thousands of domestic pets;
be creating a din of noise and a cloud of pollution in all metropolitan areas,
affecting sleep, concentration, and intelligence, making the air in some cities so
unbreathable that children and the elderly cannot venture outside on certain days;
caused spectacular increases in asthma, emphysema, heart disease, and bronchial
infections;
be emitting one-fourth of U.S. greenhouse gases so as to threaten global climatic
stability and agriculture;
and be creating 7 billion pounds of unrecycled scrap and waste every year.

Now imagine they succeeded.

This is the automobile industry sector of commerce so massive that in 1998, five of
the seven largest U.S. industrial firms produced either cars or their fuel. If this
industry can fundamentally change, every industry can. And change it will. This
chapter describes how the world's dominant business is transforming itself to
become profoundly less harmful to the biosphere.

That transformation reflects, today partially and soon fully, the latest in a long
string of automotive innovations. In 1991, a Rocky Mountain Institute design called
the Hypercar synthesized many of the emerging automobile technologies. To maximize
competition and adoption, the design was put in the public domain (making it
unpatentable), hoping this would trigger the biggest shift in the world's
industrial structure since microchips. As revolutions go, it started quietly, with
simple observations and heretical ideas.

The automobile industry of the late twentieth century is arguably the highest
expression of the Iron Age. Complicated assemblages of some fifteen thousand parts,
reliable across a vast range of conditions, and greatly improved in safety and
cleanliness, cars now cost less per pound than a McDonald's Quarter Pounder. Yet
the industry that makes them is overmature, and its central design concept is about
to be overtaken. Its look-alike products fight for small niches in saturated core
markets; they're now bought on price via the Internet like file cabinets, and most
dealers sell new cars at a loss. Until the mid-1990s, the industry had become
essentially moribund in introducing innovation. As author James Womack has
remarked, "You know you are in a stagnant industry when the big product innovation
of the past decade is more cup holders." Virtually all its gains in efficiency,
cleanliness, and safety have been incremental and responded to regulations sought
by social activists. Its design process has made cars ever heavier, more complex,
and usually costlier. These are all unmistakable signs that automaking had become
ripe for change. By the 1990s, revolutions in electronics, software, materials,
manufacturing, computing, and other techniques had made it possible to design an
automobile that would leapfrog far beyond ordinary cars' limitations.

The contemporary automobile, after a century of engineering, is embarrassingly

inefficient: Of the energy in the fuel it consumes, at least 80 percent is lost,
mainly in the engine's heat and exhaust, so that at most only 20 percent is
actually used to turn the wheels. Of the resulting force, 95 percent moves the car,
while only 5 percent moves the driver, in proportion to their respective weights.
Five percent of 20 per-cent is one percent not a gratifying result from American
cars that burn their own weight in gasoline every year.

The conventional car is heavy, made mostly of steel. It has many protrusions,
edges, and seams that make air flow past it turbulently. Its great weight bears
down on tires that waste energy by flexing and heating up. It is powered by an
internal combustion engine mechanically coupled to the wheels. Completely
redesigning cars by reconfiguring three key design elements could save at least 70
to 80 percent of the fuel it currently uses, while making it safer, sportier, and
more comfortable. These three changes are:

making the vehicle ultralight, with a weight two to three times less than that of
steel cars;
making it ultra-low-drag, so it can slip through the air and roll along the road
several times more easily; and
after steps 1 and 2 have cut by one-half to two-thirds the power needed to move the
vehicle, making its propulsion system "hybrid-electric."

In a hybrid-electric drive, the wheels are turned largely or wholly by one or more
electric motors; but the electricity, rather than being stored in heavy batteries
recharged by plugging into the utility grid when parked (as is true of battery-
electric vehicles), is produced onboard from fuel as needed. This could be achieved
in any of a wide range of ways: An electric generator could be driven by an
efficient gasoline, diesel, Stir-ling (external-combustion) engine, or by a gas
turbine. Alternatively the electricity could be made by a stack of fuel cells
solid-state, no-moving- parts, no-combustion devices that silently, efficiently,
and reliably turn hydrogen and air into electricity, hot water, and nothing else.

Electric propulsion offers many key advantages. It can convert upward of 90 percent
of the electricity produced into traction. Electric propulsion uses no energy when
a vehicle is idling or coasting. Electric motors are light, simple (they contain
only one moving part), reliable, inexpensive in volume production, and able even at
low speeds to pro-vide high torque several horsepower continuously, or about ten
briefly, from a motor the size of a fist. Finally, a motor that uses electricity to
accelerate a car can also act as a generator that recovers electricity by
deceleration. Energy recovered by this "regenerative braking" can be reused, rather
than wasted, as is the case with mechanical brakes.

Ultralight hybrid-drive autos could be more durable, and could potentially cost
less, than traditional cars. Blending today's best technologies can yield a family
sedan, sport-utility, or pickup truck that combines Lexus comfort and refinement,
Mercedes stiffness, Volvo safety, BMW acceleration, Taurus price, four- to
eightfold improved fuel economy (that is, 80 to 200 miles per gallon), a 600 to 800
mile range between refuelings, and zero emissions. Such integration may require one
or two decades to be achieved fully, but all the needed technologies exist today.

Hypercars could also decrease by up to tenfold each of four key parameters of

manufacturing. These are the time it takes to turn a conceptual design into a new
car on the street, the investment required for production (which is the main
barrier to new firms' or models' entering the market and the main source of
automakers' financial risk), the space and time needed for assembly, and the number
of parts in the autobody, perhaps even in the entire car. Together, such decisive
advantages would give early adopters a significant economic edge in what is now a
trillion-dollar industry.

To introduce Hypercars into the market successfully, new gasoline taxes or

government standards are not required. Nor is it necessary to adopt many
environmentalists' assumption, and oil drillers' hope, of sharply rising longer-
term oil prices. (Such a price hike is unlikely for two reasons. First, there is
intense competition from other ways to pro-duce or save energy. Second, like any
commodity, oil prices have been perfectly random for at least 118 years, and no
important social objective should be made to depend on a random variable.) Nor,
finally, would Hypercars be small, sluggish, or unsafe; on the contrary, as an
uncompromised and indeed superior product, they would sell for the same reason that
people buy compact discs instead of vinyl phonograph records.

For these reasons, during the years 1993-98, the private sector committed roughly
$5 billion to developments on the lines of the Hypercar concept investments that
produced an explosion of advances. In April 1997, Daimler-Benz announced a $350
million joint effort with the Canadian firm Ballard to create hydrogen-fuel-cell
engines. Daimler pledged annual production of 100,000 such vehicles per year by
2005, one-seventh of its total current production. Six months later, the president
of Toyota said he'd beat that goal, and predicted hybrid-electric cars would
capture one-third of the world car market by 2005.

In December 1997, a decade earlier than most analysts had expected, Toyota
introduced its hybrid-electric Prius sedan. It dominated the innovation-driven
Tokyo Motor Show, winning two Car of the Year Awards. Entering the Japanese market
for just over $16,000, the Prius sold out two months' production on the first day.
Ford meanwhile added more than $420 million to the Daimler/Ballard fuel-cell deal.
The next month, GM riposted, unveiling at the Detroit Motor Show three experimental
four-seat hybrid models (gas turbine, diesel-, and fuel-cell-powered) of its EV-1
battery-electric car. GM promised production-ready hybrids by 2001 and fuel-cell
versions by 2004. Automotive News reported that a marketable Ford P2000, a 40
percent lighter aluminum sedan whose 60 to 70 mpg hybrid versions had been tested
earlier that year could be in dealerships by 2000. Chrysler showed lightweight,
low-cost, molded-composite cars, one of them a 70 mpg hybrid.

In February 1998, Volkswagen's chairman, Ferdinand Porsch (whose grandfather

Ferdinand Porsche had invented hybrid-electric propulsion in 1900), said that his
company, about to start volume production of a 78 mpg car, would go on to make 118
and then 235 mpg models. Indeed, by the spring of 1998, at least five automakers
were planning imminent volume production of cars in the 80 mpg range.

By mid-1998, Toyota, still expanding Prius production to meet demand and prepare
for its U.S. and European release in 2000, revealed plans to market fuel-cell cars
"well before 2002." In October 1998, GM confirmed that the combination of fuel
cells and electric drive has "more potential than any other known propulsion
system." In November 1998, Honda announced that its 70-mpg hybrid would enter the
U.S. market in autumn 1999, a year before the Prius.

These innovations are the forerunners of a technological, market, and cultural

revolution that could launch an upheaval not only in what and how much we drive but
in how the global economy works. Such Hypercars could ultimately spell the end of
today's car, oil, steel, aluminum, electricity, and coal industries and herald the
birth of successor industries that are more benign.

Eventually, Hypercars will embody the four different elements of natural

capitalism. Their design reflects many forms of advanced resource productivity.
Their materials would flow in closed loops, with toxicity carefully confined or
designed out and longevity designed in. They are likely to be leased as a service,
even as part of a diversified "mobility service," rather than sold as a product.
Their direct and indirect transformation of the energy and materials sectors, as
discussed below, makes them a powerful way to reverse the erosion of natural
capital, particularly global warming�the more so if combined with sensible
transportation and land-use policies that provide people mobility without having to
own cars.